Bold Ideas from John Callahan in This Year’s Bethlehem Budget

Very proud of John Callahan for thinking outside the box on the latest budget in Bethlehem. Rather than just cutting more city jobs or raising property taxes, Callahan’s going for some “structural” reforms that will make both city government and city residents better off.

The most important is the switch to a single trash hauler:

Heading into his final year in office, the mayor plans to take on a difficult political fight and hire a single hauler to cart city garbage – eliminating Bethlehem’s longstanding system of requiring property owners to hire their own hauler from a list of city-approved garbage collection companies.

Callahan argued that a single hauler system would save the average city household $110 a year while providing the city with a new source of revenue that is not property tax.

The proposal is likely to draw fire from the 20 or so contractors — many of them small mom-and-pop operations — that make their living in the city and a number of residents who believe they are saving money or getting better service by hiring their own hauler.

The idea that most people save money by contracting individually with a trash hauler has always been pure fantasy. Bethlehem residents pay more than anyone else in the LV for trash collection, and have more trash on the street for it. When the public coffers have been flush with cash, there’s been no real need to dispense with this fairytale, but now that every budget involves choices between more layoffs and tax hikes, harder heads must prevail.

We know that single hauler is cheaper and and delivers better service. Palmer Township just studied the issue ahead of their switch to single hauler and they found that automated collection by a single hauler is cheapest and best. David DiGiacinto says he doesn’t think there’ll be enough time to debate this, but what is there to debate? Just go ask Palmer to see the results of their study.

The other proposals I like are selling the five city-owned parking lots to the BPA and the first responders fee on ticket sales.

Parking is a market good, not a public good. It has neither of the two qualities that a thing must have to be a public good. Therefore, the city should not be in the business of providing parking. Eventually I’d like to see the LV cities limit their involvement in the parking market to pricing curb spaces at markets. Variable pricing for curb spaces is another “structural” reform that would raise more money, but BPA should probably wait another year to let people get used to the electronic meters. Cities need to own that parking because it’s the public roads. They don’t need to own surface parking lots or parking garages. Businesses can and do make money from operating parking lots and parking garages. Eventually I’d like to see the BPA sell off its garages to private owners and its surface lots to developers who want to build buildings on them. Selling the city-owned lots was a step in the right direction.

The first responders fee is another good idea. Callahan’s right that large events and concerts require a police presence, so it makes sense to put more of the cost on the ticket buyers than on the general public. By the time people get to the Checkout page to purchase their concert tickets, an extra $2.50 isn’t going to dissuade anyone from going to see the band. It’s a nuisance sure, but so are all taxes. The key is figuring out how elastic the demand is – are people going to stop buying the thing you’re taxing, or are they going to grumble and pay up anyway? This seems like a clear case where people are going to grumble and pay up.

On EMS, I appreciate that people think it would be hard to switch to County-run 911 dispatch for various reasons, but I still think it’s a good idea. German transportation planners have a saying that I think is applicable to this situation: Organization before Electronics before Concrete. Applied to city services I’d say it’s something like Organization before Tax Changes before Tax Increases.

Yes, it would be a challenge at first for city police to get used to working with County dispatchers. It’s hard to make different organizations work together. But should that mean you just keep increasing taxes to pay for 911 services? I don’t think so. I think it means you just need to try harder to find a way to make it work.

Comments

It’s not a war against private trash hauling, it’s about who contracts with the haulers – the city or individuals. The service will still be contracted out to a private firm. The city will just be using its monopsony powers to get a better price for residents.

Jon Geeting… you are an excellent writer, but very one sided. Yes it is in essence a war against private haulers. I wish the newspapers would post interviews of all the people who will be devastatingly affected by the switch to a single hauler. I do live in Bethlehem and as someone whose family has struggled and worked hard over the years to build a small hauling and disposal business that employs and supports several families some (including my own) with a handful of children to support… I find the government deciding to step in to a private business area and take over, allowing ony one single hauler just because it is an easier way to do THEIR job and balance the budget is a horrible idea. While our business is thankfully not conducted in Bethlehem, I feel for all these businesses. THESE PEOPLE. THEIR FAMILIES. Obviously only a large company can afford to take on this contract, and that will NOT be a locally owned company. Most likely none of the employees will even live in or spend any money in the area. How many families will be affected by this? How many families who have been working hard all these years to build a business will lose their ONLY source of income? Lose their homes, be unable to support their familes… unable to pay taxes, unable to spend their money at other bethlehem area businesses and possibly need to go on welfare and public housing??? Mr. Callahan are you considering these costs? How can you sleep at night knowing how many families you will run out of business and destroy? Do you really think this will save residents money over the long term? No way! All the small companies who compete for business right now will no longer be around to compete in future bids for contracts. With no competition the large haulers can charge whatever they want. Also the large haulers will not take your yard waste, or large items, or more than a couple cans. The residents will need to dig in their pocket to get rid of these items and in the end pay significantly more for much less what they are already getting now. All I can say is good luck running for any office in the future. I know you won’t have my vote.

Jessica this blog has advocated often against small business. You’ll find no sympathy here, nor any thought toward how to make something like this work for the benefit of all (like a co-0p of small haulers under a single city contract). You see, this would require thought, analysis and a conscience. None of these exist here.

Mr. Geeting wants anyone who doesn’t do what he thinks they should to to suffer massive consequences, including loss of everything they’ve worked for.

Thanks for the comment Jessica. I definitely see where the trash hauler business owners are coming from, and feel bad for the people who would lose their businesses as a result of the change. I don’t mean to pretend there aren’t costs. However, I think that in this case, the benefits to city residents far outweigh the costs to the trash haulers. City residents would avoid a more substantial tax increase and more layoffs of core service providers, and they’d get cheaper, better trash collection service. Taking the citywide view, there’s just not a very compelling argument for retaining the current system. If we’re making this about who deserves our sympathy, I feel worse for the much larger group of public sector workers who have lost their jobs over the past 3 years. Bethlehem’s government is certainly not overstaffed, and they’ve now cut well past the fat and into the bone. Every budget entails some pain for some group or another. So far it’s only been public sector workers feeling the brunt of the cuts. That’s not fair. It’s time that other service providers shared in the sacrifice.

Thanks for making my point. If the ‘greater good’ is served by someone who has spent their entire life building something being destroyed, well that’s ok. But a bureaucrat loses their job and you feel sorry.

Actually Bethlehem has not cut into any bone. What city service in Bethlehem has suffered through their cuts? What resident has complained about a lack of service? None. That shows how bloated government had gotten.

You’re also wrong about job losses. If you go back to the start of the economic implosion, you’d see that 100% of the job losses in 2007-2010 were private sector as the Federal government was sending stimulus money to the states which states used to plug their budget gaps. Public sector losses only started in 2011 (after the stimulus funding dried up) and number well under 1 million lost jobs.

Yes, the greater good is served by more efficient reorganization of service provision. You’d have no problem if it was local government running the trash collection service and they found a way to deliver the service better with many fewer employees. You’d think it was great and wouldn’t care about the layoffs at all. This is exactly the same thing. It just happens to be that the service providers are privately owned.

Public education services have borne the brunt of the cuts and definitely have suffered. BASD had to eliminate full day Kindergarten and after school programs. Class sizes are up, and test scores are down. The budget cuts absolutely hurt service delivery. It’s less clear what damage the cuts have done to police, fire services or administration since they’ve been doing the cuts through attrition, letting posts go unfilled.

You’re wrong about state and local job losses. The state and local cuts started right in October 2008 and continued despite the stimulus. Thank God the stimulus prevented further hemorrhaging. It wasn’t good enough, but it stopped even more cuts to private sector jobs, which would have happened had even more laid off public sector workers had to cut back their spending at local businesses.

Rich, it’s not bashing. The days when a person was willing to accept a lower wage in exchange for a better benefits package are long gone. Public employee unions do a better job than any group going at buying off political support, and it shows.

It’s not union bashing to state it’s no longer acceptable that municipal employees can retire on full pension at 50 years of age. Just old enough ‘retire,’ then go for another muni job and get 2 taxpayer paid pensions.

Extend minimum retirement age to at least 65. Eliminate “years of service” retirement triggers. Work until you’re at least 65 to get your pension, period.

Defined benefit plans are not sustainable and need to be done away with/replaced by defined contribution plans.

Public union employees must pay more of their healthcare and pension costs.

If a muni employee commits a significant crime (in PA, misdemeanor 1 or felony) they are no longer elibigle for a taxpayer paid pension.

No lump sum distributions permitted.

Finally, the mediocrity or worse that public employee unions protect is staggering. When I look at the poor quality of the typical muni employee vs. who I know is out of work, just blows me away. Just walk into the Allentown PennDOT office to see what I mean.

Here’s the problem with keeping workers in the workplace longer: there’s less jobs for younger workers. There’s much better ways to lessen the hit of pensions, such as banning “double-dipping.” No one’s standing here saying that’s a bad idea. Keeping people in their jobs for like 40 years is kind of nonsense though.

Retirement age should be 65 for public employees. Shift the compensation mix toward mostly cash, with employees insured under newly-expanded Medicaid. Defined-contribution pensions OR forced saving. No lump sum distributions. On the municipal side, you need to consolidate administration of plans, or more radically, consolidate the payer base. One outside the box idea would be for the state to establish development targets for the 5 largest metros, where the goal is to grow the housing and office supply by a certain percentage each year, and municipalities can’t start turning down new development until after the target is hit. That’s where most state revenues are coming from in the first place. If you want to fix pensions, you need the top 5 metros to produce more wealth.

The problem with pensions is that this is little the City can do. Act 111 would need to be amended. Until Harrisburg Acts, cities like Bethlehem need to deal with it and react accordingly. WHile I never advocate against unions, I think the state should seriously look at changing to a defined contribution pension.

As for trash, I for one think this is long overdue. Good luck to Callahan getting this through the council.

since i actually live here thought i would weigh in. a single hauler system is cheaper on the citizens of the city. its more effective with a higher qaulity of service and all the other surrounding cities already have it. most of the private haulers that citizens are forced to purchase from and yes were forced are not even based in the city. the mayors job is to find the best option available to the city and its citizens and the single hauler system has been proven hands down to be it.

Mr Marshall did not “poll” me. When was that conducted. I am so satisfied with my private trash hauler, I can’t believe it is an issue AGAIN, AND AGAIN, AND AGAIN, AND AGAIN. The expense for hauling my trash would most certainly go up. The point of recycling was to “reduce trash” deposited on the landfill. The City encouraged recycling, is proud of it (at taxpayer expense). Callan is leaving…he does not care about the privage sector jobs that will be lost. One last thing, no matter what the price of the single hauler system….the VERY NEXT DAY
the agreed upon price WILL go up. You see, there are expenses they didn’t “Anticipate” surely they will have to “pass along” the cost to THEM of Obamacare…..please give it a rest, and leave my trash ALONE!

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